bonds

Content tagged with "bonds"

Displaying 51 - 60 of 69

Fact Sheet on Financing Municipal Networks

We are adding a new fact sheet to our growing collection with the new, Financing Municipal Networks Fact Sheet. Many have assumed that municipal networks are funded with taxpayer dollars, but this is not true in the overwhelming number of cases. When a community decides it needs to establish its own publicly owned network infrastructure, one of the biggest challenges is financing the investment. Each community is unique but three main methods of financing are most popular. This fact sheet offers a quick look at these common approaches and provides real-world examples. Download the Fact Sheet [pdf]

HB 286 Refined for New Hampshire Legislature

We caught up with Carole Monroe from New Hampshire FastRoads to get an update on what is happening in the legislature this sesssion. We reported last spring on HB 286, intended to allow local communities more decision making power. The bill did not advance last session, but new language may breath new hope into the proposal.

If the bill passes, it will remove restrictions that prevent local governments from bonding to finance broadband infrastructure. This and similar bills have been introduced in the past, but large incumbent providers always seem to stop them.

Monroe tells us that this session the bill clarifies the definition of "open access network." The bill also changes language regarding "unserved and underserved" areas. Now the bill requires municipalities to include areas without "adequate" broadband if they choose to finance through bonds. "Adequate" in the bill language relies on the FCC definition of broadband as it changes over time, currently 4 Mbps download and 1 Mbps upload. The change does not restrict building in all areas as long as some areas without "adequate" coverage are included.

The new language also clarifies that municipal networks built only for government purposes do not have to be part of the open access model. Past versions of the bill questioned application of the open access model to municipal I-Nets.

While some of the language of the bill has changed, the fundamental goals remain the same. Local communities need to make the decision to bond. In order to do so, state barriers must be removed. Current state law only allows bonding for broadband infrastructure under strict criteria which only apply in a fraction of the state. 

Monroe reiterates that the bill intention is also to create a more competitive environment. She noted that the area is already benefitting from a competitive spirit. Broadband pricing proposals to community anchor institutions show significantly lower rates per Mbps. Service level agreements are more favorable to community anchor institutions since the creation of FastRoads.

Election Day 2013 Community Owned Network Referendum Roundup

Starting with the good news, voters in Colorado overwhelmingly supported municipal network intiatives. Longmont voted 2:1 in favor of bonding to fast track network expansion. We have covered this issue in great depth recently. Read all of our coverage of Longmont here. The local paper covered the referendum results in this story:
2B's passage means approval for the city to issue $45.3 million in bonds to build out the city's 17-mile fiber optic loop within three years. Longmont Power & Communications has estimated that the payback time on the bond will be 11 years. If revenues from commercial and residential customers fall short, LPC's electric service revenues will be used to make up the shortfall, LPC staffers have told the Longmont City Council.
South in Centennial, voters supported restoring local authority to build a network by a 3:1 margin. We most recently wrote about this referendum here. In Seattle, the mayor that campaigned on a citywide fiber network and backed off it but created a partnership with Gigabit Squared to bring gigabit fiber to 12 neighborhoods lost in his bid for reelection to the candidate that that was strongly supported with Comcast donations. However, the election does not appear to have turned on broadband issues:
McGinn’s fate was forecast two years ago, when voters slapped back his efforts to obstruct the Highway 99 tunnel project, opting to move ahead with the long-debated project. McGinn’s anti-tunnel agitating was viewed as a reversal from his 2009 election-eve pledge not to stand in the project’s way.
We continue to be disappointed in the lack of serious discussion in many races about how local governments can make meaningful improvements in Internet access for residents and businesses.

As Emmetsburg Plans to Vote on Muni Network, Mediacom Misinforms

The Iowa community of 4,000 will take up Public Measure D on November 5th. Voters will decided whether to approve a $3.5 million bond issue to cover approximately half the cost to build a FTTH system. Incumbent Mediacom is distributing flyers throughout the community urging a "no" vote. Community leaders are doing their best to combat Mediacom's propaganda by educating the voters.

We reported about the community's 1998 vote to establish a municipal cable communications or television system. The city did not act on the vote at the time because the project was cost prohibitive. The estimated cost of the project is now about $3 million less than it was in the late 1990s. Emmetsburg wants to seize the opportunity by joining The Community Agency (TCA), a coalition of municipalities in the region that collectively own a hybrid fiber coaxial cable network. Emmetsburg would join with a full fiber network.

The town currently provides natural gas, water and wastewater services through its municipal utility.

In a flyer [pdf] aimed at convincing locals to vote no, Mediacom brags that "Customers in Emmetsburg get the same services as those in larger cities..." Unfortunately, Mediacom's service in larger cities is also awful and more suited to the late 1990's than the modern digital economy. Consumer Reports has rated Mediacom among the absolute worst Internet providers in the United States.

Public Question D reads:

Longmont Prepares to Vote on Fiber Bonds - Community Broadband Bits Episode #68

As Longmont prepares to vote on November 5, we are paying special attention to question 2B, which will authorize the city utility to issue revenue bonds to finance the FTTH network already being built. The successful referendum from 2011 gave the City authority to build the network and this referendum, if successful, will finance a rapid expansion rather than the present incremental approach that will take decades. We have a double interview today, with Vince Jordan rejoining the show from Longmont Power and Communications. He previously spoke with us on episode 10 but today he just gives us the facts about the network and scenarios of what will happen depending on how the city votes. The second interview is with George Oliver, co-founder of the grassroots group Friends of Fiber that is advocating for people to vote yes on question 2B. George explains the benefits of passing this debt, namely that area residents and businesses will gain access to a world class networks without increasing any taxes. Friends of Fiber is on Twitter and Facebook. Read our other stories on Longmont here. Read the transcript from this show here. We want your feedback and suggestions for the show - please e-mail us or leave a comment below. Also, feel free to suggest other guests, topics, or questions you want us to address. This show is 30 minutes long and can be played below on this page or via iTunes or via the tool of your choice using this feed. Listen to previous episodes here. You can can download this Mp3 file directly from here. Find more episodes in our podcast index. Thanks to Break the Bans for the music, licensed using Creative Commons.

Washington State Law Change Transformed Fiber Project in Poulsbo

The story has been updated to fix errors. The original story described the project as a partnership but we have since learned it is a project of the Kitsap Public Utility District that is encouraged by the City.

We reported on Poulsbo, Washington, last fall after the community began a wireless pilot project providing a free high-capacity wireless mesh network throughout downtown. Kitsap Public Utility District is running the project, with encouragement from the City. An interview with Poulsbo City Council member Ed Stern filled in more details on this local project.

A wireless mesh pilot project was not the original plan. The public utility district had been investing in a fiber optic network to reduce costs for local government and provide better broadband for schools and hospitals. Stern and other city leaders also recognized that encouraging telecommuting would keep local dollars in the community. Poulsbo is very close to Seattle and city leadership hoped to draw employees from Seattle offices and encourage economic development. They offered a high quality of life and knew better broadband would draw more employers to Poulsbo.

The partners installed a fiber backbone throughout the city and had planned to expand last mile connections in the near future. Poulsbo also codified changes in conduit policy with new ordinances to better manage public rights-of-way. The code requires private providers to first use existing city conduit and the city reserves the right to lease it to them. This policy prevents unnecessary wear and tear and traffic disruption on local streets.

However, the state legislature erected barriers that derailed the full project by revoking PUD authority to offer direct retail services. To this day, public utility districts are required to wholesale access, which rarely creates enough revenue to justify the initial cost of building networks. Community leaders knew that wholesale-only models carry more risk because they split an already tight revenue stream. With the change in state law, the community re-evaluated the fiber network plan. 

Longmont to Vote a 3rd Time on Fiber Network

The Longmont community will soon have the chance to decide how quickly they want ubiquitous FTTH. On July 23rd, the City Council unanimously approved a proposal to ask voters in a referendum if they want to bond for funds to speed up construction of the LPC fiber network. Absent bond financing, the network will expand much more slowly over many years.

Readers will remember the 2011 referendum to allow the electric utility to offer broadband services to the people and businesses of Longmont. At the time, Comcast spent over $300,000 via the Colorado Cable Telecommunications Association to fund an unsuccessful Vote No astroturf campaign. The community approved the measure with 60% of the vote. There was an earlier referendum in 2009 that ended in a victory for Comcast following a successful astroturf campaign. Records showed a similar infusion of cash to sway the vote. 

In the recent meeting, some Council Members expressed concern over the city bonding to invest in the telecom business. The Longmont Times Call reported on the meeting:

"We're again a government playing in the private world of capitalism," [Councilman Brian] Bagley said. "What if we don't know what we're doing?"

City Manager Harold Dominguez noted that even if voters approved a bond, the city could still take on a partner. If it passes, he said, the city would have a pretty good idea of how big a piece of the market it could get. And implementation wasn't a huge risk, he said, because the city already knew it could provide the service; it had been doing so for itself, the school district and a few other large users for years.

"Based on the information we've received, yes, we can do it," Dominguez said.

Monticello Moves Closer to Settlement with Bondholders

It has been about a year since we checked in on FiberNet Monticello, a city-owned FTTH network about 40 miles northwest of Minneapolis. At that time, the network was generating insufficient revenue to meet debt payments, the private company operating the network (HBC) was stepping down, and Gigabit Squared was kicking the tires. Since then, Gigabit Squared and Monticello decided against a partnership and the City ceased making payments to bondholders. Previously, the City had covered the difference between revenues and debt payments by borrowing from the City's liquor store fund, a municipal enterprise fund. Monticello had financed the network with unbacked revenue bonds, meaning investors understood from the start that the full faith and credit of taxpayers would not "make them whole" in the event that the network did not create the revenues necessary to pay back the bond. Because Monticello chose that financing method, it had to pay a higher interest rate - those who buy bonds understand the differences in risk with different types of bonds and rates. However, the City has been negotiating with bondholders for a settlement to avoid potential lawsuits over the telecom utility and because this is a typically what how these situations are worked out. Bondholders will "take a haircut" in the parlance of finance rather than risk a total loss. Last week, Monticello City Council approved a $5.75 million proposed settlement in addition to the remaining funds left in the reserve fund, totaling approximately $8 million from an outstanding bond of $26 million. Final resolution may take many more months, but the major arguments seem to be worked out. This means that Monticello will own and continue to operate FiberNet Monticello. It also means that rather than having a network financed by revenue bonds, the network will have benefited from City funds from the liquor store and will almost certainly be re-financed with other City funds.

Princeton, Massachusetts, Considering Building Own Fiber Network

We recently reached out to Princeton, Massachusetts, after reading several local news articles about the city's ambition to improve broadband in the community. Phyllis Booth of the Landmark has been covering the story. Community leaders recently mailed survey cards to every residence in town and put the survey online to provide ample opportunity for feedback.

With survey results complied, the answer from respondents was an overwhelming, "Yes! We want better Internet!" The Princeton Broadband Committee has since made the results available in a series of visuals that express the community's experiences with speed, customer satisfaction, desirable applications, and other respondent concerns. Detailed survey results are available for review [PDF].

The results come as no surprise to Stan Moss, Board of Selectmen Member who is also on the Broadband Committee. "Everybody has tried everything," says Stan when he describes the survey outcome. The community of 3,300 has access to DSL in about 49% of households and other choices are satellite, dial-up, and wireless. According to Moss, Princeton DSL customers averaged a D+. From the Landmark article:

“Once we invest in the fiber it’s pretty good. It’s not costly to upgrade in the future, it’s reliable once it’s in place,” said [Broadband Committee Member John] Kowaleski. “If the town doesn’t do this, no one will,” he added. The town has contacted Verizon and Charter and “we’re not even on their plan,’’ said Kowaleski. “Princeton has insurmountable challenges. It isn’t profitable for Verizon or any other company to provide the infrastructure to give us the service,” said Kowaleski.

Moss says he receives calls on a regular basis from residents who want to know when the city is going to provide FTTH. Most of those calls come from people who work from home or have school age children.

Cedar Falls Utility Gets High Bond Rating from Moody's

We have long been impressed with Cedar Falls Utilities (CFU) in Iowa. They built an incredibly successful municipal cable network that has now been upgraded to a FTTH network. CFU transfers $1.6 million into the town's general fund every year, reminding us that community owned networks often pay far more in taxes than the national cable and telephone companies. Last week, Moody's Investor Service gave an investor-grade A-3 rating to revenue debt from CFU, another sign of its strong success.
Moody's rating report noted the utility's large market share, competitive pricing and product offerings, expansive fiber optic network, long-term financial planning and conservative budgeting practices as reasons for the continued strong rating of the utility's revenue debt.
CFU also compiles the community savings resulting from each of its services by comparing its rates to nearby communities (see most recent comparison [pdf]). The benefits total $7.7 million each year, almost $500 per family. This includes a $200 difference in cable TV bills and a $130 difference in Internet service.